March 12, 2013
Ronald W. Smith
Corporate Secretary
Municipal Securities Rulemaking Board
1900 Duke Street
Alexandria, VA 22314
Re:
MSRB Notice 2013-04 (February 11, 2013):
Request for Comment on Codifying Time of Trade Disclosure
Obligation Proposed Rule G-47
Dear Mr. Smith:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates
the opportunity to comment on the Municipal Securities Rulemaking Board’s (“MSRB”)
Request for Comment on Codifying Time of Trade Disclosure Obligation and proposed
Rule G-472 (the Proposal”). Over time, MSRB Rule G-17, through a myriad of interpretive
guidance, has been applied to varied unrelated activities. SIFMA, therefore, generally
supports the concept behind this initial effort by the MSRB to provide clarity to regulated
entities by reorganizing or eliminating certain interpretive guidance associated with MSRB
Rule G-17 into new or revised rules that highlight core principles.
However, as detailed below, SIFMA believes the Proposal has significant gaps as
well as represents a significant expansion of the existing time of trade obligation and does
not fulfill the MSRB’s stated objective that “[t]he codification of the interpretive guidance
into a rule is not intended to substantively change the time of trade disclosure obligation.
Rather, the codification is an effort to consolidate the current obligations into one easy to
follow rule . . . and [to] make the rules more flexible and easier for dealers and municipal
advisors to understand and follow.” Accordingly, SIFMA’s members believe a re-proposal
1
SIFMA brings together the shared interests of hundreds of securities firms, banks and asset
managers. SIFMA’s mission is to support a strong financial industry, investor opportunity, capital formation,
job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with
offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets
Association (GFMA).
2
MSRB Notice 2013-04 (February 11, 2013) available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2013/2013-04.aspx?n=1.
New York | Washington
120 Broadway, 35th Floor | New York, NY 10271-0080 | P: 212.313.1200 | F: 212.313.1301
www.sifma.org
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 2 of 11
is warranted and suggest that existing interpretive notices be reorganized similarly to the
way the MSRB reorganized the Rule G-37 interpretive notices into a more user friendly
format3. Additionally, it is not apparent that the proposed codification of existing guidance
and new rule format will provide any material benefit to brokers, dealers, or municipal
securities dealers. Complete, comprehensive, and consolidated “time of trade disclosure
obligation” requirements and guidance should be considered.
I.
Dealers’ Longstanding Time-of-Trade Disclosure Requirement
Since its adoption, Rule G-17, the MSRB’s fair dealing rule, has encompassed two
general principles: a duty on brokers, dealers, or municipal securities dealers not to engage
in deceptive, dishonest, or unfair practices; and imposing a duty to deal fairly4. The first
prong of rule G-17 is essentially an antifraud prohibition. As for the second prong, as part
of a dealer’s obligation to deal fairly, the MSRB has interpreted the rule to create
affirmative disclosure obligations for dealers. The MSRB has stated that a dealer’s
affirmative disclosure obligations require that a dealer disclose, at or before effecting a
municipal securities transaction5 with a customer, a complete description of the security, and
all material facts about a transaction known to the dealer, as well as material facts about a
security when such facts are reasonably accessible to the market. These obligations apply
even when a dealer is acting as an order taker and effecting non-recommended secondary
market transactions.6
II.
Existing Interpretive Notices
As noted in MSRB Notice 2013-04, Rule G-17 is a principles-based rule, which has
been expanded upon through numerous interpretive notices and interpretive letters. Time of
trade disclosure guidance has been covered by the MSRB in at least twenty three
interpretive or regulatory notices7, three of which were filed with or approved by the
3
See Rule G-37 Interpretive Questions and Answers (February 25, 2004) available at
http://msrb.org/Rules-and-Interpretations/MSRBRules/General/~/link.aspx?_id=9880F6021140412A80C5234F33980302&_z=z
4
See Exchange Act Release No. 13987 (September 22, 1977). The duty to “deal fairly” is intended to
“refer to the customs and practices of the municipal securities markets, which may, in many instances differ
from the corporate securities markets.”
5
SIFMA notes (as further discussed in Section VII.a.i.) previously issued MSRB guidance primarily
focuses the time of trade disclosure obligations on when a dealer is selling a municipal bond to a customer.
Several MSRB Notices only describe the disclosure requirement as arising when selling a municipal security.
Very limited guidance, (and none recently) has been issued covering situations when a customer is selling a
bond.
6
See MSRB Notice 2002-10 (March 25, 2002), available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2002/2002-10.aspx?n=1, approved by the Securities and Exchange
Commission (Release 34-45591) (March 20, 2002).
7
See MSRB Notice 2013-04, at Note 3. Additionally, See MSRB Notice 2012-27, Securities and
Exchange Commission approves the restatement of an interpretive notice of the Municipal Securities
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 3 of 11
Securities and Exchange Commission8 (“SEC”), most recently in restating the application of
Rule G-17 to sophisticated municipal market professionals9. These notices came about due
to a variety of circumstances – and contain nuances that are easily lost in the short bullet
point format of the “specific scenarios” in Proposed Rule G-47.
III.
Consolidated Interpretive Notices
The MSRB has noted in the Proposal that “[m]arket participants have expressed
concern regarding the difficulty of reviewing years of interpretive guidance to determine
current obligations”. SIFMA suggests that the MSRB consolidate existing interpretive
notices and guidance into a user friendly format similar to the format previously utilized by
the MSRB when it reorganized the Rule G-37 interpretive notices into a more user friendly
format10 – preserving the text of the original notices, but consolidating in one place the
guidance given by the MSRB concerning disclosure obligations generally and in specific
scenarios. We believe a good starting point for consolidated guidance is MSRB Notice
2011-67 (November 30, 2011), where the MSRB answered frequently asked questions
regarding dealer disclosure obligations under Rule G-17.
IV.
Absence of SMMP
A dealer’s time of trade disclosure requirements are significantly affected by the
status of a customer as a Sophisticated Municipal Market Professional (“SMMP”). While it
is our understanding that the MSRB plans to codify dealings with SMMPs into a rule
separate from both G-17 and Proposed Rule G-47, since the only current SMMP interpretive
guidance primarily relates to time of trade disclosures, we strongly believe that G-47 should
affirm existing guidance regarding providing time of trade disclosures to SMMPs: when a
dealer has reasonable grounds for concluding that the customer is an SMMP, the dealer’s
obligation to ensure disclosure of material information available from established industry
sources is fulfilled.
Rulemaking Board (“MSRB”) concerning the application of MSRB Rule G-17 (on conduct of municipal
securities and municipal advisory activities) to sophisticated municipal market professionals or “SMMPs” (the
”Restated Notice”). The full text of the Restated Notice is available at http://msrb.org/Rules-andInterpretations/MSRB-Rules/General/Rule-G-17.aspx?tab=2#_D37D3EF9-F642-4A63-A40D3A6B33B5260A . See also, MSRB Notice 2009-28 (June 1, 2009) available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2009/2009-28.aspx?n=1 .
8
See MSRB Notice 2002-10, supra note 5, MSRB Notice 2009-42 (July 14, 2009) available at
http://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2009/2009-42.aspx?n=1 , and the Restated
Notice, supra note 6.
9
See the Restated Notice, supra note 6.
10
See supra note 3.
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 4 of 11
V.
Proposed Deletion of MSRB Notice 2002-10
Under the Proposal, the MSRB has identified MSRB Notice 2002-1011 for deletion.
MSRB Notice 2002-10 is one of the few MSRB notices discussing a dealer’s time of trade
disclosure obligations that has been approved by the SEC. While the substance of the main
text of this notice has been captured by Proposed Rule G-47, a critical discussion has been
omitted – which does not exist in any other SEC filed or approved MSRB notice providing
guidance on time of trade obligations. Specifically, Footnote 7 details the time of trade
obligations of dealers operating electronic trading platforms:
Dealers operating electronic trading platforms have inquired whether providing electronic
access to material information is consistent with the obligation to disclose information under
rule G-17. The MSRB believes that the provision of electronic access to material information
to customers who elect to transact in municipal securities on an electronic platform is
generally consistent with a dealer’s obligation to disclose such information, but that whether
such access is effective disclosure ultimately depends upon the particular facts and
circumstances present.
SIFMA’s members have relied on this language in developing longstanding policies
and procedures to provide time of trade disclosures to customers utilizing electronic
trading platforms. The discussion above was most recently affirmed and cited by the
MSRB in MSRB Notice 2011-6712, which was not approved by or filed with the
SEC. Deletion of MSRB 2002-10 calls into question the validity of this section in
MSRB 2011-67. SIFMA believes it is critical that this concept be affirmed by the
MSRB in Rule G-47 which has been inadvertently deleted or superseded through the
Proposal.
VI.
Proposed Deletion of MSRB Notice 2002-05
Under the Proposal, the MSRB has identified MSRB Notice 2002-0513 for deletion.
We note that this is the only existing guidance concerning the time of trade disclosure
obligation on securities sold below minimum denominations. Our members believe the
background information contained in this notice is important to understanding the scope of
this specific scenario that may be material to the transaction:
Municipal securities issuers sometimes set a relatively high minimum denomination,
typically $100,000, for certain issues. This may be done so that the issue can qualify for one
of several exemptions from Securities Exchange Act Rule 15c2-12, meaning that the issue
11
MSRB Notice 2002-10 (March 25, 2002), available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2002/2002-10.aspx?n=1 .
12
See MSRB Notice 2011-67 (November 30, 2011), MSRB Answers Frequently Asked Questions
Regarding Dealer Disclosure Obligations Under Rule G-17, available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2011/2011-67.aspx?n=1 .
13
MSRB Notice 2002-05 (January 31, 2002) available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2002/2002-05.aspx?n=1 .
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 5 of 11
would not be subject to certain primary market or continuing disclosure requirements. In
other situations, issuers may set a high minimum denomination even though the issue is
subject to Securities Exchange Act Rule 15c2-12. This may be because of the issuer’s (or the
underwriter’s) belief that the securities are not an appropriate investment for those retail
investors who would be likely to purchase securities in relatively small amounts.
Thus, SIFMA supports keeping MSRB Notice 2002-05 intact.
VII.
The Proposed Rule is an Expansion of Current MSRB Guidance and
Lacks Critical Nuances and Perspective
a. The Proposed Rule and Definitions
SIFMA believes that the proposed rule is overly broad, prohibits certain existing
sanctioned practices, and includes requirements beyond existing MSRB interpretive
guidance. Additionally, the proposed rule lacks certain critical nuances.
i. Customer Sales
In its Proposal, the MSRB has made no distinction between the dealer's time of trade
disclosure obligation for sales to customers and purchases from customers. That is
inconsistent with current MSRB guidance. Existing MSRB guidance primarily focuses on
time of trade disclosure obligations when a dealer is selling a municipal bond to a
customer.14 Very limited guidance has been issued covering situations when a customer is
selling a bond.15 SIFMA believes this proposed extension of a time of trade disclosure
obligation—undifferentiated by the type of trade—is not warranted, as arguably the selling
customer knows the features of the security that it owns and the potential purchaser is about
14
See MSRB Notice 2010-37 (September 20, 2010), MSRB Reminds Firms of their Sales Practice
and Due Diligence Obligations when Selling Municipal Securities in the Secondary Market (emphasis added),
available at http://msrb.org/Rules-and-Interpretations/Regulatory-Notices/2010/2010-37.aspx?n=1 . See also
MSRB Notice 2011-67, supra note 4 (“On September 20, 2010, the MSRB and FINRA issued reminder
notices to brokers, dealers and municipal securities dealers (“dealers”) of their sales practice obligations when
selling municipal securities in the secondary market (the “2010 Notices”). The 2010 Notices reiterate MSRB
interpretive guidance issued to dealers in prior years, including MSRB Notices 2002-10 (the “2002 Notice”)
and 2009-42 (the “2009 Notice”), which were filed with the Securities and Exchange Commission (“SEC”)”
(citations omitted and emphasis added)
15
See MSRB Interpretation of February 18, 1993 (Put option bonds: safekeeping, pricing), available
at http://msrb.org/Rules-and-Interpretations/MSRB-Rules/General/Rule-G-17.aspx?tab=3#_ECDFD5BE5AD9-4065-B572-8A79858618EA . See also MSRB Interpretation of April 30, 1986 (Description provided at
or prior to the time of trade), available at http://msrb.org/Rules-and-Interpretations/MSRBRules/General/Rule-G-17.aspx?tab=3#_9D2E1273-8A20-4E4A-9258-533D9281F890 . And see MSRB
Interpretation June 12 1995 (Transactions in Municipal Securities with Non-standard Features Affecting
Price/Yield Calculations), available at http://msrb.org/Rules-and-Interpretations/MSRB-Rules/General/RuleG-17.aspx?tab=2#_E02C6245-CBC5-4B0C-85E3-EFBCA76963FF .
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 6 of 11
to assume such risks.16 This new requirement could be harmful to customers and would also
be unnecessarily burdensome for dealers. For example, a particular dealer may not have
recommended or even sold the bond to the particular customer – and may not be familiar
with the credit. Researching and disclosing all material facts about such a bond to a
customer who simply wants to sell it will delay the trade; it’s unclear what the benefit to the
selling customer would be. Another scenario to consider is when an estate has given its
dealer instructions to liquidate an entire portfolio. Again, requiring a dealer to meet an
identical time of trade disclosure obligation when the sale is by, not to, a customer could
decrease liquidity while the dealer does its own diligence, as well as increase the cost of the
trade. SIFMA believes that a dealer’s role in a customer sale transaction is to facilitate that
sale at a fair and reasonable price; this primarily requires an examination of the market and
trading data relative to that security. We urge the MSRB to explicitly recognize that a
substantially different time of trade obligation exists in these circumstances – and that the
Proposal’s “Disclosure Obligations in Specific Scenarios” may not be applicable at all when
a customer seeks to sell its holdings. If the MSRB extends an undifferentiated time of trade
disclosure obligation to customer sale transactions, we request that the MSRB conduct a
thorough cost benefit analysis.
ii. Rating Agency Reports
SIFMA’s members request that the MSRB clarify “rating agency reports” within the
definition of “established industry sources” contained in Proposed Rule G-47(b)(i) . SIFMA
understands the reference to “rating agency reports” to mean reports that are produced by
rating agencies and made publicly available by the rating agencies without a subscription.
Additionally, the use of the term “reports” has the further implication to distribute credit
event-driven reports and that disclosure of the rating action alone is insufficient. The
MSRB should further clarify that firms are under no obligation to distribute such reports.
iii. Material Information
The Proposal defines in Section (b) (ii), material information as “Information is
considered to be material if there is a substantial likelihood that the information would be
considered important or significant by a reasonable investor in making an investment
decision.” SIFMA’s members believe that this definition should be modified to exclude
unpublished price sensitive information (“UPSI”), sometimes also referred to as non-public
material information. Often a public finance department may be aware of a yet to be
announced ratings change, planned tender offer, or an impending, not yet public, refunding
transaction. Broker-dealers routinely impose information barriers between investment
bankers and trading personnel to prevent insider trading in advance of a new offering, and
we do not believe Proposed Rule G-47 should require those barriers to be dismantled. We
16
SIFMA and its members acknowledge that knowledge professionally available to dealers, such as
a ratings change that has not yet been noticed to EMMA, or a call at par announced minutes ago via
Bloomberg, is material and should be disclosed.
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 7 of 11
believe this clarification would be consistent with existing time of trade disclosure
obligations and securities laws generally.
While SIFMA appreciates the reiteration of a definition of "material information" in
the proposed Rule, we believe it would be helpful for the MSRB to explicitly address the
concept that an event disclosed by an issuer or obligated person pursuant to a SEC Rule
15c2-12 continuing disclosure agreement (“CDA”) does not necessarily constitute “material
information” that would be required to be disclosed to investors; and that even if such
information was material at the time it was disclosed, that it does not remain material
forever. Long-past credit ratings changes, or substitutions of trustees, or a continuing
disclosure filing that was a few days late five years ago should not automatically be deemed
material at the time of trade merely because these events triggered a disclosure obligation
pursuant to the CDA at the time of occurrence. It is our understanding that the MSRB wants
the customer to be informed of important relevant information at the time of trade, which
will certainly include information about structure and recent events affecting the credit,
price, and yield of the security. However, unless some reasonable limit is placed on the
ever-expanding total universe of information available about securities (that often have a
lifespan of twenty years or more), the customer is at risk of being drowned in a sea of details
by dealers uncertain whether anything may legitimately be excluded from time-of-trade
disclosure. This will not help the customers to make an informed decision about a purchase.
FINRA’s Municipal Securities Disclosure Report, which is published monthly, only
identifies those events filed within the past six months. SIFMA suggests that a six month
look back would be a reasonable time limit for disclosing past information.
b. Supplementary Material
i. Manner and Scope of Disclosure
The Proposal seems to eviscerate recent MSRB “access=delivery” initiatives,
including the MSRB’s recent concept proposal to require underwriters to submit preliminary
official statements (“POSs”) to the MSRB’s Electronic Municipal Market Access
(“EMMA”) system.17 . In connection with marketing new issues of municipal securities to
customers, dealers have relied upon MSRB guidance that providing a POS, when available,
to a customer “can serve as a primary vehicle for providing the required time-of-trade
disclosures under Rule G-17, depending upon the accuracy and completeness of the POS as
of the time of trade.”18 In MSRB Notice 2012-61, the MSRB identified a variety of
“access=delivery” methods that a customer could use to access a POS:
17
See MSRB Notice 2012-61 (December 12, 2012) available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2012/2012-61.aspx?n=1 . SIFMA’s comments on MSRB Notice 2012-61
are available at http://www.sifma.org/issues/item.aspx?id=8589941965 .
18
MSRB Notice 2009-28 (June 1, 2009) available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2009/2009-28.aspx?n=1 .
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 8 of 11
If an issuer has prepared a preliminary official statement for a new issue of municipal
securities, it will typically make it available to the market by various methods, including
posting it electronically on an issuer’s website or a commercial site, or by making it
available electronically (or in hard copy) through its financial advisor or directly to investors
upon request. Typically, preliminary official statements posted electronically are made
available to syndicate and selling group members by access to an internet link and in some
cases a password. A dealer may then access the preliminary official statement, download it
as a portable document format (PDF) file and transmit it to other non-syndicate member
dealers or to a dealer’s own clients. Alternatively, a dealer may direct interested persons to
the link itself.
Providing access to a POS, whether on EMMA or some other electronic platform,
should continue to satisfy a dealer’s time of trade obligation for new issues of municipal
securities. Proposed Rule G-47.01 (b) and (c) seems to prohibit activity recently
championed by the MSRB. Furthermore, the proposed new obligation could create a risk of
having dealers misinterpret or inadequately summarize the information available where a
POS is made available to investors.
SIFMA also requests further clarification to the types of “disclosure of general
advertising materials” referenced in Proposed Rule G-47.01 (c) that the MSRB believes are
inadequate. Like the MSRB itself, many dealers have sought to continually educate and
inform their customers about the features and risks of municipal bonds. (The MSRB may
regard these as "advertising materials".) It is clearly better for customers to be pre-briefed
on concepts such as optional calls or the role of a liquidity provider, so that time of trade
disclosure can be efficient and allow for prompter execution. The Rule as drafted permits
disclosures "at or prior to the time of trade", and customer–facing educational material
should not be rendered legally worthless by the need to make other, time-specific
disclosures at the time of trade.
c. Disclosure Obligations in Specific Scenarios
With respect to the 15 specific scenarios listed in the Proposal that may be material
under certain circumstances and require time of trade disclosure to a customer, SIFMA’s
members are concerned that this list is too prescriptive for a principles-based rule and will
become a de facto enforcement check list for regulators – whether or not the information is
actually material in the context of the particular transaction. It may also have the
unintended consequence of dealers relying on the four corners of the notice – and not
consider other unenumerated factors that may become material in the future. If the MSRB
proceeds with proposed rule format, we suggest that the existing related interpretive notices
be reorganized by specific scenarios, as many of the listed specific scenarios are the subject
of more than one interpretive notice.
Below are comments on some of the specific scenarios listed in the Proposal:
Credit risks and ratings: Unlike many of the other specific scenarios which address
static bond features, credit ratings are potentially more fluid. Accordingly, as noted above,
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 9 of 11
it would be helpful to define a material look-back period for credit ratings changes for
purposes of time of trade disclosure.
Securities sold below the minimum denomination: See our discussion above in
Section VI19.
Securities with non-standard features: This is an impossibly amorphous definition.
The prior uses of this term have been related to situations where the bonds pay interest
annually, rather than semi-annually --a fact that affects yield calculations. This new usage
seems to have no bounds, and adds the traditional interpretation as an afterthought. In this
context it would be helpful to know what the MSRB considers to be standard features, aside
from semi-annual interest payments?
Issuer's intent to pre-refund. Unless this has been publicly announced, it will not be
known to established industry sources, and would likely be material non-public information.
Failure to make continuing disclosure filings: SIFMA’s members are concerned that
this requirement is too open ended and that is should be made clear (either in Proposed Rule
G-47 or new interpretive guidance) that for secondary market trades the “discovery” by a
dealer that an issuer has failed to make filings required under its continuing disclosure
agreements is limited to a dealer’s review of “failure to file” notices on EMMA pursuant to
Rule 15c2-12, if any.20 For primary offerings, a more robust obligation, i.e. to review the
financial statement filings as they are posted on EMMA, is made possible by the access of
the underwriter to the issuer in a primary offering context.
d. Processes and Procedures
Our members believe that Proposed Rule G-47.04, Processes and Procedures, is an
expansion of current regulatory requirements, is too narrow, and omits critical guidance as
set forth in MSRB Notice 2011-6721.
Proposed Rule G-47.04 states:
Processes and Procedures. Brokers, dealers, and municipal securities dealers must
implement processes and procedures reasonably designed to ensure that material information
19
We also note that some sales below minimum denominations occur in the context of estate
settlement. The deceased's will evenly divides securities holdings, and brother then sells to sister to re-create a
minimum denomination in one or the other's portfolio. In such cases, the purchasing legatee is enhancing, not
decreasing, the liquidity of the holding.
20
Our members strongly believe “failure to file” notices that pre-date EMMA are not considered
material to a current trade as the market long ago absorbed such information.
21
See MSRB Notice 2011-67 (November 30, 2011), MSRB Answers Frequently Asked Questions
Regarding Dealer Disclosure Obligations under Rule G-17, available at http://msrb.org/Rules-andInterpretations/Regulatory-Notices/2011/2011-67.aspx?n=1 .
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 10 of 11
regarding municipal securities is disseminated to registered representatives who are engaged
in sales to and purchases from a customer.
The related relevant language in MSRB Notice 2011-67 is:
What are the supervisory obligations of dealers regarding the fair dealing and
disclosure obligations under MSRB Rule G-17?
Under MSRB Rule G-27, dealers must supervise their municipal securities business and
ensure they have adequate policies and procedures in place to monitor the effectiveness of
their supervisory systems. They must supervise the municipal securities activities of their
associated persons, have adequate written supervisory procedures, and implement
supervisory controls to ensure their supervisory procedures are adequate. Importantly,
dealers must implement processes to ensure that material information regarding municipal
securities is disseminated to their registered representatives who are engaged in sales to and
from customers. It would be insufficient for a dealer to possess such material information, if
there were no means by which a registered representative could access it and provide such
information to customers. (citations omitted and emphasis added)
A dealer that provides its registered representatives access to such information
satisfies current MSRB guidance under G-17. This should similarly be sufficient under G47. We also note that incorporating this guidance into Proposed Rule G-47 is an expansion
of existing regulatory obligations as currently approved by the SEC – and is not merely a
codification of existing regulations. Any enforcement against dealers for failing to
disseminate or provide access to their registered representatives of material information
regarding municipal securities should be applied solely prospectively.
Mr. Ronald W. Smith
Municipal Securities Rulemaking Board
Page 11 of 11
VIII.
Conclusion
SIFMA sincerely appreciates this opportunity to comment upon the Proposal.
SIFMA generally supports the concept behind this initial effort by the MSRB to provide
clarity to regulated entities by reorganizing or eliminating certain interpretive guidance
associated with MSRB Rule G-17 into new or revised rules that highlight core principles.
However, as detailed above, SIFMA believes the Proposal has significant gaps as well as
represents a significant expansion of the existing time of trade obligation and does not fulfill
the MSRB’s stated objective not to substantively change the time of trade disclosure
obligation through this Proposal. Accordingly, SIFMA’s members believe a re-proposal is
warranted.
We would be happy to meet with you and the MSRB’s staff to discuss our comments
further. Please do not hesitate to contact me with any questions at (212) 313-1265.
Sincerely yours,
David L. Cohen
Managing Director
Associate General Counsel
cc:
Municipal Securities Rulemaking Board
Lynnette Kelly, Executive Director
Ernesto Lanza, Deputy Executive Director
Gary L. Goldsholle, General Counsel
Lawrence P. Sandor, Deputy General Counsel – Regulatory Support